Bucks saves millions by delaying its borrowing

Expecting rate drop, county waits two weeks for bond issue.

November 06, 2008|By Robert H. Orenstein Of The Morning Call

By delaying a decision to borrow $55 million for a couple of weeks, Bucks County expects to save nearly $5.4 million in interest payments over 15 years, the county's top financial manager said last week.

The commissioners on Oct. 15 authorized Brian Hessenthaler, director of finance and administration, to borrow the money when interest rates were favorable.

The bond issue, which will help pay for a new parking garage and additional open space preservation, will not result in a tax increase.

"We will not have to raise taxes because of this bond issue," Hessenthaler said.

He said he couldn't say at this point whether the county budget, to be released the middle of this month, will include a tax increase.

The average rate for the bonds in mid-October was slightly above 5.52 percent; by the end of the month, the county was able to obtain an average annual rate of 4.54 percent, according to county spokeswoman Stacey Hajdak.

The county could delay borrowing because there was "no dire need for the money," Hessenthaler said. "We sat and watched and kept on eye on things."

When the county borrowed the $55 million, it also refinanced $11 million from a 1997 bond issue, which will save about $470,000 in next year's debt payment.

The county plans to spend the $55 million on several improvements, including:

25 million for open space preservation;

14 million to build a new parking garage.

8.5 million for a variety of technological and computer software upgrades, including a new computerized assessment system.

Building the parking garage is part of a plan for a new courthouse in Doylestown. A four-level, 1,200-space garage will be built on Broad Street. After that is built, the courthouse will be constructed on the site of the old garage.